Wall Street Lower In Cautious Trading

Wall Street Lower In Cautious Trading

Stocks are in the red again on Wall Street for the second time this week and, in the case of the S&P 500, for the third consecutive trading session, as conflict in the Middle East and further signs of softness in the US housing market weigh on investor confidence.

By Tuesday, September 23, 2014 - 00:00

Wall Street Lower In Cautious Trading

By mid-afternoon in New York, the Dow Jones Industrial Average was down 0.45% or 77 points at 17,095 and the S&P 500 500 Index had fallen 0.50% or 10.1 points to 1984.2, with declines being felt across the board.

The US and its military partners launched a wave of air strikes in Syria against the islamic jihadist organization known as the Islamic State (IS) in the early hours of Tuesday. The US state department says it issued advanced warnings to the Syrian military not to engage US aircraft but had not requested permission nor given notice of any schedule for the air strikes. America’s armed forces have launched air strikes against IS in Iraq previously, but this is the first attack in Syria. President Obama revealed that theUS was ‘joined in this action’ by Saudi Arabia, the UAE, Jordan, Bahrain and Qatar, saying ‘America is proud to stand shoulder to shoulder with these nations on behalf of our common security.’

The action has given rise to some caution in the financial markets, with safe havens rising alongside today’s decline in equity prices. Gold advanced 0.64% to $1223 per ounce and silver climbed 0.38% to $17.82 per ounce.

Following on from yesterday’s unexpected drop in existing home sales, a report today from the Federal Housing Finance Agency showed price rises are slowing. The FHFA house price index rose just 0.1% in July following a 0.3% gain in June. The consensus estimate had been for a 0.4% rise. The latest housing data seems to point to softness in the sector, which has done little to help risk appetite today.

Slightly more encouraging is the most recent indicator for the manufacturing sector: Markit’s flash reading of its manufacturing PMI for September came in at 57.9, unchanged from the final reading in August and down just 0.1 from the 58.0 reading at mid-month in August. The regional, but closely followed, Empire State and Philly Fed manufacturing surveys last week also suggest manufacturing activity has been healthy in September, and today’s release of the Richmond Fed shows agreement, advancing to a level of 14 in September from 12 in August.

In the forex market, the US dollar was down on the day against its Canadian counterpart earlier in the trading session but recovered after the release of Canadian retail sales that showed a surprise drop for July. Canadian retail sales had achieved substantial growth in April, May and June, but declined 0.1% in July, versus expectations for a 0.4% gain. Though this is a disappointing result, sales in July were 5.0% higher year-on-year, and recent strength in Canadian exports suggest Canadian GDP should be on a firm footing in the third quarter. By mid-afternoon in New York, USD/CAD was up 0.27% at 1.1073, having been as low as 1.0985 before the release of the retail sales report.

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